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Shanghai Hyron Software Co., having business relations with theJapanese market, started receiving favor from investors recentlythanks to the June 1 official start of direct yen-yuan trading inthe Shanghai and Tokyo markets. The move makes the yen the first major currency besides the U.S.dollar that can be directly traded with the yuan. Conductingtransactions without using a third country's currency will reducetransaction costs and lower risks involved in settlements atfinancial institutions. Last year, Hyron Software registered a revenue of 312 million yuan($49.5 million) in the Japanese market, accounting for about 80percent of its gross revenue. Japan also contributed to almost 90percent of Hyron's profits from main businesses. In the days tocome, direct yen-yuan exchange will definitely benefit the companyby significantly cutting down trade settlement costs. China's central bank said the development of the direct trading ofthe yuan and the yen will enhance their statuses in bilateraltrades and investments, strengthen financial cooperation and shoreup the increasingly expanding Sino-Japan business interactions. Beneficial leap At the micro-level, firms like Hyron Software are the biggestwinners since direct yen-yuan trading means lower exchange costs inSino-Japan business activities. China, Japan's fourth largest trade partner, also has the islandcountry as its second business associate. Last year, Sino-Japantrade totaled $344.9 billion. With the direct trading policyadopted, a total of $3 billion will be saved in transaction costs. "At the macro-level, direct trading will contribute to improvingconvenience of both countries' currencies and reinvigorating theTokyo market," said Ding Zhijie, professor of the University ofInternational Business and Economics. Both sides can also take it as a means not only to manage andreform the international monetary system, but also to improvemutual understanding and regulate exchange rates and foreignexchange markets. Ding notes that direct yen-yuan exchange can also show the rest ofthe world their confidence in building a free trade area amongChina, Japan and South Korea. At the Fifth Trilateral Summit Meeting among the three countriesheld in Beijing on May 13, Chinese Premier Wen Jiabao, South KoreanPresident Lee Myung Bak and Japanese Prime Minister Yoshihiko Nodaagreed on the start of the China-South Korea-Japan Free Trade Area(FTA) talks within 2012. With a 1.5-billion population, the FTA,making up 20 percent of the world's economy and 70 percent of theAsian economy, will match North America and the EU to become theworld's third economic zone. Financial cooperation is a major condition in establishing a FTA,while direct currency trading is an indispensable prerequisite. Thedirect yen-yuan trading will undoubtedly give a boost to thetrilateral talks, showing a proactive gesture on this issue. Actually, the China-South Korea currency settlement was put intopractice on a trial basis. As trilateral free trade continues toexpand, direct trading will not just be limited to the yuan and theyen the South Korean won is also likely to follow suit. Yuan globalization "It is an important step for the globalization of the yuan, andmarks the entry of the Chinese currency to the world monetarymarket," said Zhang Bin, a researcher at the Institute of WorldEconomics and Politics at the Chinese Academy of Social Sciences. To go global, the yuan has to serve as a settlement currency firstthrough trading. Besides the U.S. dollar and euro, the Japanese yenis a major settlement currency. The Chinese yuan is the settlementcurrency for the world's second largest economy. Through directtrading with the yen, the yuan is more likely to be accepted by theinternational market, since Tokyo is one of the most vibrantforeign exchange markets. I am an expert from idaccessory.com, while we provides the quality product, such as Magnetic File Holders , China Badge Slot Punch, Conference Name Badge Holders,and more.
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